Tag Archives: bailout

The Voting Rights Act

The Supreme Court ruled on Northwest Austin Municipal Utility District No. 1 NAMUDNO v. Holder, No. 08-322 (2013), answering the question of the whether a district (not the state) could seek the bailout provision under the Voting Rights Act.

The decision of the Supreme Court is important here because it did not rule on the issue of whether the Voting Rights Act was constitutional.

Instead, the Supreme Court ruled that the district could use the “bailout” provision under the Voting Rights Act, even if the state could not.  In holding this, the Supreme Court explained that the district fell under the definition of a “State of political subdivision,” and thereby could use the “bailout” provision.

Generally, the Voting Rights Act requires certain states to get pre-clearance before making any changes to elections.  One of these states includes Texas.  However, there is a provision (“bailout”) that states that the state can seek a declaratory judgment from a three-judge panel District Court in Washington, D.C.  42 USC 1973(b)(a)(1), 1973c(a).  The bailout provision requires:

  • The state has not used any forbidden voting test for the last 10 years;
  • The state has not been subject to a valid objection under the Voting Rights Act section 5;
  • The state has not been found liable for other rights act violations; and
  • The state has engaged in constructive efforts to eliminate intimidation and harassment of voters.

The Voting Rights Act only authorizes a bailout suit by a State or political subdivision.  42 USC 19873b(a)(1)(A).

Here, the government argued that under the statutory definition of the bailout provision, a district could not seek a bailout provision.  The Act provided that a “‘political subdivision’ shall mean any county or parish, except that where registration for voting is not conducted under the supervision of a county or parish, the term shall include any other subdivision of a State which conducts registration for voting.” Section 14(c)(2).  The government argued that because the district was not a county or parish and did not conduct its own voter registration, the district was not covered under the Act.

However, the Supreme Court disagreed.  Citing previous Supreme Court cases, the Supreme Court stated the definition of a “political subdivision” must be broad and not limited to the statutory definition.  The Supreme Court explained,

Our decisions have already established that the statutory definition in [section] 14(c)(2) does not apply to every use of the term “political subdivision” in the Act.  We have, for example, concluded that the definition does not apply to the pre clearance obligation of [section] 5.

There, we expressly rejected the suggestion that the city of Sheffield was beyond the ambit of [section] 5 because it did not itself register voters and hence was not a political subdivision as the term is defined in [section] 14(c)(2) of the Act… [O]nce a State has been designed for coverage, [section] 14(c)(2)’s definition of political subdivision has no operative significance in determining the reach of [section] 5.

(markings in original).  Taking a broad approach, the Supreme Court ruled that a district was a political subdivision.

In addition, the Supreme Court noted that the 1982 amendments provided that even if the state could not bailout, a political subdivision might be able to assuming it met the bailout requirements.

via We gave you a chance: Today’s Shelby County decision in Plain English : SCOTUSblog.

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AIG decides not to join lawsuit against government

The board of American International Group won’t be joining a $25 billion lawsuit that claims shareholders were harmed by onerous terms of the insurer’s government bailout.

The board announced its decision on Wednesday, report the New York Times Taking Note blog and the Associated Press. AIG has repaid the United States for the $182 billion bailout, resulting in a government profit of $22.7 billion.

A company run by one-time AIG chief executive Maurice Greenberg filed the suit in November 2011. The company, Starr International, once owned 12 percent of AIG. The complaint alleged the government charged “punitive” interest rates on its loans and enabled a “backdoor bailout” of the insurer’s Wall Street clients by using AIG money to pay off credit default swaps. Greenberg is represented by David Boies in the suit, which argues a Fifth Amendment takings violation.

AP spoke to Columbia law professor John Coffee about AIG’s decision. “The majority of directors decided that the reputational damage was greater than the possibility on a long-shot lawsuit,” he said.

via AIG Won’t Join Suit Claiming Its Government Bailout Harmed Shareholders – News – ABA Journal.

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AIG considers lawsuit against government

AIG is considering joining a lawsuit against the US government claiming that the bailout harmed its shareholders.  Starr International, a company that once owned 12% of AIG, will ask the AIG board to join its lawsuit against the government.

The complaint filed in November 2011 alleged that the government charged a “punitive” interest rates on its loans and enabled a “backdoor bailout” of the insurer’s Wall Street clients by using AIG money to pay off credit default swaps.

If AIG decides to join the lawsuit, AIG could face additional shareholder lawsuits if it decides against joining the $25 billion suit and the action ultimately proves successful, according to the New York Times DealBook Blog.

 

via AIG Considers Joining Suit Claiming Its Government Bailout Harmed Shareholders – News – ABA Journal.

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